DCX Extends Schrempp's Deal

DaimlerChrysler's supervisory board on Wednesday extended the contract of chairman Juergen Schrempp to 2008, named a new finance chief, and plucked one of its most popular executives at the Chrysler Group to run the Mercedes-Benz unit.

Schrempp's extension was not a surprise, but the move was not greeted with widespread approval among analysts and institutional shareholders given the ongoing losses at Chrysler and the company's Mitsubishi affiliate, as well as a falloff in quality at Mercedes. Schrempp seems immune from criticism on his supervisory board.

Meanwhile, the board named Bodo Uebber as chief financial officer, replacing retiring Manfred Gentz effective next December. Most important to the Chrysler Group was the approval of Chrysler COO Wolfgang Bernhard as head of the Mercedes division effective this May, replacing retiring Juergen Hubbert. Tom LaSorda was confirmed as the new COO at Chrysler.

DCX reports year-end earnings today. The company said earlier this month its 2003 profit fell sharply as the Chrysler turnaround and a one-time financial adjustment battered the bottom line. Chrysler's U.S. market share fell to 12.8 percent last year from 13.1 percent in 2002, and its U.S. sales fell 3.5 percent in 2003.

Known for his caffeinated style, Bernhard was to be a key figure overseeing the critical product launches Chrysler has this year and next. That job falls to LaSorda and sales and marketing chief Joe Eberhardt. Bernhard filled a role at Chrysler not occupied since Bob Lutz retired as vice chairman in 1997; that of product boss. Bernhard sometimes took reporters on off-the-record tours of auto shows at odd hours, noting which vehicles impressed him and which were deficient. Bernhard has spearheaded, working with design chief Trevor Creed, the design themes for Chrysler, Dodge, and Jeep vehicles that will hit the market for the next five years. In Jeep, for example, Bernhard got rid of a fanned grille installed by former design chief Tom Gale, unifying the grilles across all Jeep vehicles to the vertical seven-slot design. He has guided the Jeep product cycle to emphasize more muscular and functional utility vehicles, and seemed to have a better grasp on some American design traditions than some of his American predecessors. The auto press gravitated to Bernhard because he, like Lutz and only a handful of other auto executives, was both credible and entertaining.

It is perhaps not surprising that Bernhard was tapped for the Mercedes job, and not former BMW product boss Wolfgang Reitzle who has been rumored a candidate. Reitzle is chairman of Linde AG these days, and would have been a polarizing figure at DaimlerChrysler at a time when the company is trying to close ranks in the face of mounting criticism that Schrempp's master expansion plan that now includes Chrysler and stakes in Mitsubishi and Hyundai, has made the company financially weaker, not stronger as was intended.

Meanwhile, news reports from Japan late Wednesday said Mitsubishi CEO Rolf Eckrodt may resign in the coming days to take the blame for the automaker's continued poor performance. Eckrodt was installed by DCX, which owns 38 percent of Mitsubishi. Speculation is that Smart Car chief Andreas Renschler, who wanted the top job at Mercedes and was a candidate for it, will succeed Eckrodt. Poor sales and loan defaults in North America are expected to push Mitsubishi's losses to $950 million for the year ending March. The company had projected to be in the black when it began a restructuring three years ago. The losses would be more than double the $426 million loss projected three months ago and would be far less than the $783 million profit booked last year, though much of that was based on sales booked with customers who defaulted on loans later.